Is anyone out there still wondering just what the heck, or who the heck is Roku (ROKU) ?

Oh, I know them, they compete with Netflix (NFLX) , right? Well, yes and no. What Roku does is connect the user to streaming content through the internet. The platform allows the customers to personalize their content, while enabling publishers to build and monetize their audiences.

In fact, Netflix (BTW, I covered that short at a loss Wednesday. Discipline: rule number three) and Hulu are both available via Roku, as are CBS News, ABC News, Crackle, the CW network, and Vice. Oh, you can also gain access to Amazon (AMZN) video, Alphabet's (GOOGL) Google Play, and Vudu.

This is starting to get interesting, isn't it?

Why, Yes It Is

Roku shares surged Thursday after releasing first-quarter numbers that showed a loss of $0.07 per share (an $0.08 beat) on revenue that increased to $136.6 million, a 36.5% year-over-year rise. The fact is that there is something to get excited about here.

Several data-points within the Roku earnings release jump out at this old cat. Active accounts grew 47%, and wait for it... average revenue per account grew 50% to $15.07. Streaming hours screamed as well to a 50% gain. Oh, and it's also about the guidance. Remember February when the guidance was the problem for this company? Well, that was the winter of the firm's discontent. This is the spring of well, just plain content. Roku guided second-quarter revenue to a range of $135 million to $145 million (consensus was $135.4 million), and full-year revenue to a range of $685 million to $705 million (consensus was $674.7 million).

Now, can you Roku? Oh, did I mention that you can get Walt Disney Co.'s (DIS) ESPN+ app on Roku? I didn't? Well, you can, and that's probably good for the both of them.

The Bottom Line

Pay TV has been in decline for years now. The numbers have seemed to get worse every year since roughly 2011. That said, according to Nielsen COO Steve Hasker, some 89.5% of subscription video-on-demand viewers still primarily prefer to do their viewing on traditional television screens, and not on mobile devices. If that's true, then over-the-top (OTT) hardware providers would be the obvious evolution of what was once the cable bundle. The competition for Roku is plain as day. Apple (AAPL) TV comes to mind immediately, as does Amazon Fire.

The question becomes, can Roku compete against the big guys? The kind of growth we are now seeing means that the firm will not be ignored. At some point, I would not be surprised to see a takeover premium start to build into the stock. I am flat Roku, and have not heard that anywhere. Just a man thinking out loud again. Margins might not be there yet, but growth certainly is, and cash flows are positive.

At the time of publication, Guilfoyle was long AMZN, DIS equity. Short DIS call options. Short DIS put options.

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